Enforcement or Dirty Regulators?

The intent of antitrust law is to protect innovation and competition. But with antitrust enforcement against American companies increasing at an alarming rate around the world, there is more reason than ever to be circumspect of the motivation behind these events.

According to a March 2017 report by the U.S. Chamber of Commerce’s International Competition Policy Expert Group, foreign governments are manipulating antitrust laws to protect local companies and limit the ability of American companies to compete.

One must only look at Qualcomm, an American semi-conductor and innovation company, to see evidence of a systematic and wide-spread effort to bring enforcement actions against an American company. For example, the Korean Fair Trade Commission investigated Qualcomm for “anti-competitive practices,” eventually fining the company and forcing it to revise its pricing scheme. Just this week, the Taiwan Free Trade Commission announced it was also fining Qualcomm.

What reason would Korean and Taiwanese regulatory bodies have to work in tandem together against one American company? A recent Bloomberg article raised the possibility that two of the world’s largest technology companies, Apple and Samsung, worked together to influence government to bring antitrust charges against Qualcomm in an effort to drive down the price companies pay to utilize Qualcomm technology in smartphones, including the Galaxy and iPhone.

Based on court filings from Qualcomm, the Bloomberg article explains, “the Apple executive urged Samsung to pressure South Korean antitrust regulators to intensify an investigation into Qualcomm that had been open since 2014. ‘Get aggressive,’ the Apple executive said, according to Qualcomm’s filing, adding that this would be the ‘best chance’ to get Qualcomm to lower its prices.”

Unfortunately, this coordinated effort to limit the ability of an American company to compete and innovate did not stop overseas. Our own Federal Trade Commission has brought a lawsuit against Qualcomm, and it’s likely no coincidence that Apple filed suit against Qualcomm days later.

However, key authorities are raising the profile of the negative impact regulatory overreach can have on innovation and economic growth. Following the U.S. FTC’s decision to file suit against Qualcomm, the now-acting Chairman Maureen K. Ohlhausen issued a dissent, noting that the case lacked “sufficient evidence” and “will undermine U.S. intellectual property rights in Asia and worldwide.” Recently, she elaborated on the state of antitrust laws, noting that not only are foreign governments utilizing antitrust laws to erode American companies’ IP rights, but that there are critics working to harm the existing patent system right here in the U.S.

Additionally, Reuters reported on a release from Taiwan’s Ministry of Economic Affairs which expressed deep concern about the impact the fine could have on the future business opportunities between Taiwan and Qualcomm.

While this is an egregious example of regulators bending to the will of influential companies, there is much more at stake than the impact on one company. Regardless of the players, regulatory bodies should be neutral arbiters of policy, not pawns in a fight between industry partners or impediments to economic growth. These antitrust decisions and fines erode protections of American innovation and technological leadership, and if they proceed unchecked, will ensure that our global competitors quickly catch or surpass us in the fight for the next technological breakthrough.